This article has been drafted to follow-up to the 2016 Comparative Report on Minor Disputes, which was drafted by the World Bank in cooperation with the Dutch Ministry of Foreign Affairs.
Although the main objective of most EU Member States’ legislation in regulating small claims procedures is to allow for fast and efficient settlements and to cut costs for parties, in most EU Member States – Croatia included – several problems have appeared.
This article summarizes the basic statutory provisions governing small claims in Croatia, provides a short overview of the problems relating to small claims in the practice of the Croatian courts, and proposes ways to address these problems.
Basic Statutory Provisions
Small claims in Croatia are governed by the country’s Civil Procedure Act (the “Act”), which lays down special provisions governing small claims procedures. Where these special provisions do not apply, other provisions of the Act, which govern ordinary civil procedure, do.
Small claims are those in which the value of the dispute does not exceed HRK 10 thousand, or HRK 50 thousand for procedures pending before commercial courts.
The experience of Croatian courts shows that most small claims procedures are initiated when, upon appeal by the enforcement debtor against a payment order in a writ of enforcement rendered by a notary public, the claims are forwarded to courts. Such procedures often relate to settlement of monetary claims due to debts for utility services (such as electricity, heating, gas, water, and cleaning services), postal and telecommunications services, etc.
The first distinguishing feature of the small claims procedure is that the parties are obligated to provide all the facts on which they base their claim in the application (or in their defence at the latest), and to provide all the evidence necessary to establish the facts provided. A party may provide the facts in the preparatory hearing as well, but only if it could not have provided them earlier, “with no fault on its part.”
Furthermore, should the claimant fail to appear in the first hearing upon being invited, he or she will be deemed to have withdrawn his/her application, unless the defendant engages in discussion during the hearing.
Also, special appeals may be lodged only once the court’s decision is issued at the conclusion of the procedure. The time limit for the appeal is only eight days, and the judgment may not be contested due to erroneous or incomplete facts.
Finally, the only extraordinary appeal possible is the so-called “extraordinary revision,” representing an extraordinary legal remedy lodged against second-instance court rulings available only under the following conditions: (i) where the dispute is of such a nature that a so-called “ordinary revision” is not allowed; and (ii) where the dispute falls within a category for which extraordinary revision is expressly prescribed by law. In addition, in order for an “extraordinary revision” to be lodged, certain additional statutory assumptions must be fulfilled.
These rules reflect the legislature’s intention to facilitate faster and more efficient handling of small claims. However, these solutions have led to certain problems in the practice of the Croatian courts.
Problems in Practice and Their Solutions
The most frequent issues in handling small claims procedures are: (i) a lack of clarity as to how individual procedural provisions are to be applied (for example, inconsistent interpretation of the concept “with no fault on its part” in the context of a party being prevented from providing facts and evidence prior to preparatory hearing); (ii) lengthy court proceedings; and (iii) efforts by the defendant to avoid settling liabilities (primarily related to item (ii), since lengthy judicial proceedings benefit the defendants by delaying the settling of liabilities).
The following solutions may be beneficial in addressing the problems: (i) the establishment of courts exclusively tasked with handling small claims; (ii) implementation of standard models of national small claims procedures, based on the model provided in EU Regulation No 861/2007; and (iii) the setting of fixed periods for the handling of small claims procedures by the courts.
In small claims procedures, the intention of the legislator is to balance the need to safeguard the rights and interests of parties with the need to speed up judicial proceedings and reduce the burden of the courts.
In this process, certain problems are inevitable. However, it is crucial to determine the cause of problems and find new models to efficiently address them, while speeding-up and improving access to such procedures.
By Linda Krizic, Head of Litigation and Dispute Resolution, and Andrej Zmikic, Associate, Divjak Topic & Bahtijarevic
This Article was originally published in Issue 4.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.